Before we consider the IT trends in this specific field, let us quickly understand what exactly is Supply Chain Management.
Supply chain management (SCM) is the control of the supply chain as a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain management does not involve only the movement of a physical product (such as a microchip) through the chain but also any data that goes along with the product (such as order status information, payment schedules, and ownership titles) and the actual entities that handle the product from stage to stage of the supply chain. There are essentially three goals of SCM: to reduce inventory, to increase the speed of transactions with real-time data exchange, and to increase revenue by satisfying customer demands more efficiently. (1)
In the digital era companies are re-developing their supply chain taking advantage of new information technology trends to gain edge over their competitors at each step. The increased money companies will make or save through optimized logistics and supply chains is estimated at $3 trillion through 2022. (2)
In this blog, comprised of four parts, we will look at some emerging Information technology trends being used by farmers, manufacturers and retailers in food and medical industry which helps them to enhance the supply chain management.
Food Supply Chain
A food supply chain or food system refers to the processes that describe how food from a farm ends up on our tables. The processes include production, processing, distribution, consumption and disposal.
Food Supply Chain includes transportation and storage of food from point of origin until reaches the consumers.
Driving factors behind IT Trends
A food supply chain contains farming, delivering food items to manufacturers, processing of food items, storage in warehouses, shipment to wholesalers and subsequently to retailers and then the final last mile delivery to end consumers. In each stage, it involves Information technology for collaboration between partners, tracking of goods, monitoring the quality of goods, procurement and retail purchase data and customer service. Therefore, Information technology enables enhancement in Integration, Tracking, Quality Monitoring and e-Business from a food SCM perspective.
Different players in a supply chain have different objectives for their business, they use different software and in some cases, have manual operation. As speed has become a key factor in competitive global market, integrating the business needs of each organization and automation of processes in a supply chain continues to be a focus. More and more businesses will be adapting SCM software to reduce their manual operations, and large organizations continue to enhance integration and data exchange internally between systems and externally with their partners.
Tracking of goods is no longer restricted to a consumer who wants to know when his package will arrive, it now is needed in every stage of a food supply chain, during transportation, inside warehouses and at each step of last mile delivery. Goods tracking is critical for wholesaler’s procurement and sales strategy, and important for retailers who must meet delivery deadlines in an exceedingly competitive market. Often the choice of a e-retailer is based on who can deliver within hours and not within days.
Quality Monitoring during storage is a specific requirement for food and medical industry, as any change in quality means loss of business or products being wasted. It is reported that $15 Billion is lost annually in pharmaceutical industry only due to temperature excursions. (3)
Above are the factors which are driving the emerging trends in a food SCM from IT perspective. In addition to these, there are others like Augmented Reality and Artificial Intelligence which will be used in planning future warehouses and automating the storage and picking.